Marketing & E- Commerce Under The Purview Of Consumer Protection Act, 2019

Abstract

The article is based on the recent amendment that took place in the Consumer Protection Act, 2019. The amendment has played a pivotal role in changing the marketing strategies of the business enterprises by prohibiting business enterprises to make false claims about their product. The Act also cover the E-Commerce platforms as well. Two of the most significant features of this Act are Product liability: The seller/manufacturer will be liable to pay for the damages caused under the provisions of the 2019 Act. As earlier the consumer had to file a civil suit for claiming the damages. The second significant feature is referring the case for mediation if the parties agree for the same and the Consumer Commission shall recommend the case for mediation, but the final decision will be that of the parties.

Keywords: Consumer Protection, Product liability, E-Commerce, Marketing, Mediation

INTRODUCTION

“Consumer is the real king of market” we have heard this phrase ample number of times from various business leaders, marketing experts, business analysts and various other people having an expertise in the field of business management. In order to attract more customers most of the organizations use various marketing tactics to fetch their target customers. As of today most of the organization from every field of business be it automobile industry, Fast moving Consumer Goods or Pharmaceutical industry have started using a digital platform for marketing of their products and the social networking websites like Facebook and Instagram have become an epicentre for conducting the digital marketing campaigns for almost every organization where the organizations have their own Facebook and Instagram accounts which are being used for posting about their latest products that are being launched in the market, most of the companies/organization approach social media bloggers for the advertisement of their products because they have massive number of followers which can give a boost to the sale of that particular product.

Therefore, we can say there has been a paradigm shift in the marketing techniques that were being used earlier as of what is being used right now. The roots of the online marketing can be found in the E-Commerce Business Model which invented the concept of virtual buying and selling of goods and opened the doors of digital marketing. When the course of business was evolving day by day, the need of modification in the Consumer Protection Act, 1986 was getting evident. Therefore, the government proposed an amendment and the new Act that is Consumer Protection Act, 2019 came into force on July 20, 2020. It empowers consumers and help them in protecting their rights through its various notified rules and provisions.

The new Act will be the revamped version of the previous legislation and will provide speedy recoveries to the consumers as compared to the 1986 Act.

SALIENT FEATURES OF CONSUMER PROTECTION ACT, 2019

  • The new Act has led to the establishment of Central Consumer Protection Authority (CCPA), the major function of this authority is to promote, protect and enforce the rights of the consumers.
  • Powers of CCPA-:
  • Conduct investigations for the violation of consumer rights and handling of complaints and prosecution.
  • Order recall of unsafe goods and services.
  • Order to stop unfair trade practices and misleading advertisements.
  • Impose penalties on endorsers, publishers and manufacturers for misleading advertisement.

RULES ON E-COMMERCE AND UNFAIR TRADE PRACTICES

The Government formulated the Consumer Protection E- Commerce rules 2020 under the Consumer Protection Act, 2019. The provisions related to E-Commerce are as follows-:

  • The E-Commerce rules makes it mandatory for the E-Commerce Organizations to provide complete information to the consumers regarding the return, refund, exchange, warranty and guarantee, modes of payment, delivery and shipment and security of the payment methods.  The idea behind this is to keep the customer fully updated with the product purchase mechanism.
  • The E-Commerce platforms have to address the complaint of the consumer within the time frame of 48 hours and have to provide the consumer with a solution of his/her problem within one month from the date of the receipt of such complaint. It is mandatory for all the E-Commerce Organizations to appoint a grievance officer to look after the consumer grievances.
  • The sellers have to replace or pay the refund to the consumer in case the product or services are defective in nature.
  • The rules also prohibit activities like price manipulation in order to gain unreasonable profit.
  • Posting false reviews about the product also turns out to be misleading. In the case of Federal Trade Commission v. Cure Encapsulations, the Federal Trade Commission brought in this matter to the court’s notice when a complaint was being filed for posting of fake reviews on Amazon. The defendant that is the seller paid money to Amazon to post fake reviews about the product which would lead to the promotion of the product. These practices have been taking place in India as well, therefore according to these rules formulated by the Government the E-Commerce platforms have to also act diligently and avoid such practices because it would attract a legal action against not only the seller but the E-Commerce Platform as well. The Act has made it clear for all the sellers and E-Commerce entities to provide complete and authentic information to the buyers.
  • These Rules are not an advisory but mandatory and non-compliance with these rules and regulation will lead to legal action against the E-Commerce entity as well as the seller on the E-Commerce Platform.

PRODUCT LIABILITY

The manufacturer/product service provider/product seller will be held liable if there is any defect in the product which is being purchased by the consumer. They will also be liable to compensate if the consumer suffers from any injury and also for the damages caused to the consumer because of the defective product.

Grounds for Product Liability Action

  • Manufacturing Defect
  • Design Defect
  • Features of the product are not matching with the specification provided by the seller on E-Commerce: Advertisement of the product was misleading.
  • The seller has not mentioned any express warranty.
  • The seller has not provided complete information of the product for correct use.
  • Services provided are faulty and in-efficient.

PUNISHMENT FOR MANUFACTURING OR SALE OF                ADULTERATED/SUSPICIOUS GOODS

When a manufacturer/seller is being convicted for the first time under this Act then it will lead to suspension of their license for the term of two years. In case the default takes place again in the future then it may lead to cancellation of licence on a permanent basis. The endorser of the product making false claims can also be made liable for the penalty of Rupees 10 Lakhs. For subsequent contravention of this provision the endorser will be liable to pay the fine of Rupees 50 Lakhs.

ARBITRATION DISPUTE RESOLUTION & MEDIATION MECHANISM

  • Whenever a complaint is being filed by the consumer, the Consumer Dispute Redressal Commission will assess the nature of the complaint and may refer it for mediation, if there is any scope for the mediation process and the parties agree for it.
  • The Consumer Commission have established specific mediation cells for the mediation process to take place.
  • Either of the parties cannot file an appeal against the mediation process. Once the settlement takes place no further procedure of litigation can take place.

SIMPLYFYING THE CONSUMER DISPUTE PROCESS

The Act bestows power on the State and District level Consumer Commissions to review their own orders instead of a higher-level Commission reviewing the order of the lower level Commission.

  • As the world is moving towards the digital technology, so does the justice delivering mechanism, under the Act the Consumer can file his/her complaints online and the Commission which has an adjudicating authority will look after that particular matter.
  • The procedure of video conferencing has been adopted for hearing and deemed admissibility of complaints, if the question of admissibility has not been decided within the specified time frame of 21 days.
  • According to the Consumer Disputes Redressal Commission Rules, there will be no filing fee charged for the cases up to the limit of Rupees Five Lakhs.
  • The credit of the amount due to the unidentified consumers will be deposited in the Consumer Welfare Fund. The overall objective of this fund is to provide financial assistance to the consumer protection and welfare measures that are taking place in the country. In order to protect the rights of the consumers.
  • State Commissions will present a fully furnished report to the Central Government at the end of each quarter which will include all the information about the ongoing disputes, resolved disputes and vacancies in that particular State Commission.
  • As per the Act a Central Consumer Protection Council (CCPC) will be established which will function according to the Central Consumer Protection Rules. The Central Consumer Protection Council will function as an advisory body with regard to consumer issues and will work under the supervision of the Union Minister of Consumer Affairs, Food and Public Distribution, along with the Minister of State as Vice Chairperson and thirty-four other member from different fields.

COMPARATIVE ANALYSIS

Consumer Protection Act, 1986

  • No Separate Regulator
  • Consumer was able to file a complaint in a Consumer Court where the seller is located.
  • No provision related to Product Liability. The consumer had to file a case in the Civil Court but not in Consumer Court.
  • Jurisdiction Limit-:
  • District Consumer Forum for claims up to 10 lakhs INR.
  • State Commission for claims up to 1 crore INR.
  • National Commission for Claims above 1 crore INR.
  • There were no provisions related to E-Commerce.
  • There were no provisions related to Mediation Cells.

Consumer Protection Act, 2019

  • Central Consumer Protection Council will act as a regulator under the Act.
  • Complaint can be filed by the consumer in the city where he/she resides.
  • There is a provision of product liability where the consumer can seek compensation for the harm caused.
  • Jurisdiction Limits-:
  • District Consumer Forum for claims up to 1 crore INR.
  • State Commission for claims above 1 crore but not more than 10 crores INR.
  • National Commission for claims above 10 crores INR.
  • All the rules of direct selling are extended to E-Commerce as well.
  • Courts can refer the matter for mediation, if both the parties agree.

CONCLUSION

From the above analysis being done it is pretty much evident that the new amendments in the Consumer Protection Act, 2019 has provided for all the measures to ensure that the rights of the consumers are being protected in the digital space as well that is the protection of consumer rights in E- Commerce transactions. The Act also lays emphasis on the concept of product liability which was actually the need of the hour, because no such provision was there in the previous legislation and the consumer had to file a separate suit in the Civil Court for damages. The new Act has made it mandatory to follow E-Commerce Rules for all the E-Commerce Entities. The most significant feature of this Act is that it contains the provisions for mediation if the parties agree to it. All together this Act will bring a revolution in the Consumer Protection Mechanisms.

Author- Kshitij Chauhan,

ALL INDIA LEGAL FORUM

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